XML 34 R24.htm IDEA: XBRL DOCUMENT

Income and Occupancy Taxes	6 Months Ended
Jul. 31, 2020
Income Tax Disclosure [Abstract]
Income and Occupancy Taxes	18. INCOME AND OCCUPANCY TAXES The Trust is taxed as a C-Corporation. The Trust’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Trust has received various IRS and state tax jurisdiction notices which the Trust in the process of responding to in which management believes the notices are without merit and expect full remediation of all tax notices. The Trust and subsidiaries have deferred tax assets of $4.0 million which includes cumulative net operating loss carryforwards of $1.1 million and syndications of $2.9 million, and deferred tax liability associated with book/tax differences of $1.5 million as of July 31, 2020. We have evaluated the net deferred tax asset and determined that it is not more likely than not we will receive full benefit from the net operating loss carryforwards. Therefore, we have determined a valuation allowance of approximately $2.5 million. Sales and occupancy tax expense was approximately $766,000 for the six months ended July 31, 2020. This represents a liability arising from an occupancy tax discrepancy generated from our Tucson hotel which arose when we were notified in July 2020, of potentially underreporting and/or under collecting occupancy tax. We received a notice from the Arizona Department of Revenue indicating we were responsible for an additional 6% Pima County occupancy tax, in addition to the 6% State of Arizona occupancy tax we were already collecting and submitting to the State. To further complicate the situation, our filing position was such that we did not believe or know we were liable for any other tax, other than the State mandated 6%, because our hotel was located in an unincorporated area within Pima County. We were not aware of an additional County tax, and thus we filed our monthly returns as such. These additional amounts due for Hotel sales and occupancy expenses are not expected to be recurring, since the Trust collects and remits all necessary occupancy taxes to the state monthly.

Income and Occupancy Taxes

6 Months Ended

Jul. 31, 2020

18. INCOME AND OCCUPANCY TAXES

The Trust is taxed as a C-Corporation. The Trust’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Trust has received various IRS and state tax jurisdiction notices which the Trust in the process of responding to in which management believes the notices are without merit and expect full remediation of all tax notices. The Trust and subsidiaries have deferred tax assets of $4.0 million which includes cumulative net operating loss carryforwards of $1.1 million and syndications of $2.9 million, and deferred tax liability associated with book/tax differences of $1.5 million as of July 31, 2020. We have evaluated the net deferred tax asset and determined that it is not more likely than not we will receive full benefit from the net operating loss carryforwards. Therefore, we have determined a valuation allowance of approximately $2.5 million.

Sales and occupancy tax expense was approximately $766,000 for the six months ended July 31, 2020. This represents a liability arising from an occupancy tax discrepancy generated from our Tucson hotel which arose when we were notified in July 2020, of potentially underreporting and/or under collecting occupancy tax. We received a notice from the Arizona Department of Revenue indicating we were responsible for an additional 6% Pima County occupancy tax, in addition to the 6% State of Arizona occupancy tax we were already collecting and submitting to the State. To further complicate the situation, our filing position was such that we did not believe or know we were liable for any other tax, other than the State mandated 6%, because our hotel was located in an unincorporated area within Pima County. We were not aware of an additional County tax, and thus we filed our monthly returns as such. These additional amounts due for Hotel sales and occupancy expenses are not expected to be recurring, since the Trust collects and remits all necessary occupancy taxes to the state monthly.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details